Archive for November 2007

So we won’t know whether the Warehouse is going to be sold until the High Court releases the details surrounding its ruling and the Commerce Commission decides whether to appeal. Ultimately I hope the decision to allow a sale had something to do with the haloeffect ;).

Something that did catch my eye is Steven Tindall’s claim that he will act with integrity when selling his shares. For the life of me I don’t know what the hell he’s talking about. My guess is that he is going to pretend to sell to the the bidder who offers to keep the community spirit of the Warehouse going. Although to be fair to the man, he is strongly involved in charity, and I’m sure he’ll keep a stake in the company he spent so long creating.

Can anyone tell me what they think Mr Tindell’s integrity will involve, and do you think this ‘integrity’ will have a price?

The last 6 weeks have shown the New Zealand economy to be tight – but not to tight. Unemployment has fallen to a record low (3.5%), but at the same time the participation rate has fallen and employment growth has fallen to its lowest rate in a few years. Income growth was strong, but not out of control.

The QSBO indicated that capacity utilisation is still high, but not as high as it has been. Consumption imports are rising, but merchant stocks are high and retail sales growth is moderate at best, although off a high level.

House price growth is strong, but slowing. House sales are falling, but the average number of days to sell property remain short, implying that there is little pressure on highly leveraged home owners to sell property.

Today on the bus the bus driver stopped to tell school kids to stand up. This happens on occasion, and generally the adults on the bus act like they think it is a complete joke. You can here comments like ‘this is ridiculous’ and ‘the bus driver just wants to feel important’ from adults/civil servants lounging around, but ultimately I think the bus drivers understand what is going on better than the group of civil servants on the bus.

Bus drivers are like the government, they are given a certain welfare policy that has to be followed on their bus. Although conditions such as standing up to let frail older people sit down are solved internally in the ‘marketplace’ of the bus, the condition of having all adults sitting while children stand is often violated. Now don’t get me wrong, I’m not saying that the rule is right, ultimately in social welfare terms I think there is no difference between me standing or some 14 year old boy is standing, but this is the rule that the bus driver has to enforce.

The flexible working hours bill aims to increase the degree of ‘flexibility‘ in the labour market for households with a child under the age of 5 or a disabled child under the age of 18. Now I’ve heard all sorts of complaints and complements about this bill, so I’ll try to talk about the way I see it.

In the comments Kimble had a great point “long term estimates of the level of the dollar can be heavily influenced by the current level”. Although this may seem like economists being myopic, it has more to do with our extremely limited understanding of how the exchange rate works.

What do we have here, the Fed has lowered growth and inflation forecasts, Freddie Mac (a US based mortgage finance company – think subprime mortgages) suffered record losses, Citibank and Bank of America struggle with credit concerns, and the MIT real estate center recorded a fall in commercial property prices (and the first fall in commercial property values since 2003). On the back of this, the Fed feels the decision to cut rates again is on a knife-edge, with market sentiment pointing to a fall.

In a previous post we discussed the Halo effect, and how the Warehouse was trying to claim it was their own idea. Since then, the Halo effect has taken on special importance as Woolworths Ltd (Aus) and Foodstuffs decided to appeal the Commerce Commission’s decision to refuse to let one of these firms buy the Warehouse.